Chapter 5: Field Underwriting Procedures

Issuing A Health Policy

Process of issuing a policy: -Field Underwriting -Agent -Application then -company underwriting -various sources of underwriting information the application is the most used by the underwriter they can also order a consumer report (credit report) investigative consumer report -hire an investigator to meet and interview family members and friends they can request information from your doctors MIB: medical information bureau (only available for insurance companies) 3rd -risk classification -accept/decline -determine premiums 4th -policy delivery -agent or company -statement of good health -collect premium check at delivery if you did not collect it beforehand. -you also must get a statement of good health if you did not collect the premium before delivery.

Major Types of Losses

-Medical expenses -Loss of income from disability -dental expense -long-term care (nursing home)

Under the Privacy Rule for HIPAA, protected information includes all individually identifiable health information A. Held or transmitted in paper form. B. Held or transmitted in any form. C. Transmitted electronically only. D. Held in a computer format.

B. Held or transmitted in any form. Under the Privacy Rule for HIPAA, protected information includes all individually identifiable health information held or transmitted by a covered entity or its business associate in any form or media, whether electronic, paper or oral. This is called protected health information (PHI).

Which of the following entities can legally bind coverage? A. Agent B. Insurer C. The insured D. Federal Insurance Board

B. Insurer Only insurers, not agents, can bind coverage.

Who must pay for the cost of a medical examination required in the process of underwriting? A. Applicant B. Underwriters C. Department of Insurance D. Insurer

D. Insurer If an insurer requests a medical examination, the insurer is responsible for the costs of the exam.

Cost Sharing

It involves deductible and coinsurance Deductible -paid first (responsibly of the insured) -described as a dollar amount -the larger the deductible, the lower the premium Coinsurance -paid after the deductible and after the insurer paid its share -is always a percentage (e.g., 80/20) -the larger the coinsurance % for insured, the lower the premium. (the more you pay on the bill, the lower the premium)

Types of Perils

There are 2 types of Perils that are associated with accidental and health insurance policies. A Peril is a cause of a loss. -Sickness: an illness that first manifests itself while the policy is in force. -Accidental injury: an unforeseen injury that resulted from an accident rather a sickness.

Nature of Health Insurance contracts

aleatory: unequal exchange personal: between insurer and insured adhesion: "take it or leave it" unilateral: one-sided promise conditional: certain conditions must be met

An agent makes a mistake on the application and then corrects his mistake by physically entering the necessary information. Who must then initial that change? A. Applicant B. Executive officer of the company C. Insured D. Agent

A. Applicant Any changes made to the application must be initialed by the applicant.

To comply with Fair Credit Reporting Act, when must a producer notify an applicant that a credit report may be requested? A. At the time of application B. When the applicant's credit is checked C. When the policy is delivered D. At the initial interview

A. At the time of application A notice to the applicant must be issued to all applicants for health insurance coverage.

When delivering a policy, which of the following is an agent's responsibility? A. Collect payment at time of delivery B. Issue the policy if the applicant is present C. Approve or decline the risk D. Collect medical statement from physician

A. Collect payment at time of delivery The agent has the responsibility to deliver the policy to the insured and to collect any premium that may be due at the time of delivery.

The insurance policy, together with the policy application and any added riders form what is known as A. Entire contract. B. Certificate of coverage. C. Contract of adhesion. D. Whole life policy.

A. Entire contract. When a policy is issued, a copy of the application, any riders and amendments are attached to the back of the policy and become part of the entire contract

If an applicant does not receive a new insurance policy, who would be held responsible? A. The agent B. The state C. The insurer D. The applicant

A. The agent It is the responsibility of the agent to deliver the policy.

An insurer is attempting to determine the insurability of an applicant and decides to obtain medical information from several different sources. Which entity must be notified of the investigation? A. The applicant B. The Commissioner of Insurance C. The medical examiner D. The State Department of Insurance

A. The applicant It is required by law that an insurer inform the applicant of all sources that will be contacted in determining the applicant's insurability, in addition to how the information will be gathered.

Which of the following is true regarding health insurance underwriting for a person with HIV? A. The person may not be declined for medical coverage solely based on HIV status. B. A person may be declined for HIV but not AIDS. C. The person may be declined. D. The person may only be declined if he/she has symptoms.

A. The person may not be declined for medical coverage solely based on HIV status. The HIV consent form provides the insurance company with authorization to test for the presence of the HIV virus and applies to all life and health policies. Underwriting for HIV or AIDS is permitted as long as it is not unfairly discriminatory. Medical coverage, however, cannot be denied per recent health care reform (no exclusions for pre-existing conditions).

On a health insurance application, a signature is required from all of the following individuals EXCEPT A. The agent. B. The spouse of the policyowner. C. The proposed insured. D. The policyowner.

B. The spouse of the policyowner. Every health insurance application requires the signature of the proposed insured, the policyowner (if different than the insured), and the agent who solicits the insurance.

An agent is ready to deliver a policy to an applicant but has not yet received payment. Upon delivery, the agent collects the applicant's premium check, answers any questions the applicant may have, and then leaves. What did he forget to do? A. Ask the applicant to sign a statement that acknowledges that the policy had been delivered B. Collect a late payment fee C. Ask her to sign a statement of good health D. Offer her a secondary policy

C. Ask her to sign a statement of good health If the premium is not collected until the policy is delivered, the agent must receive a statement of good health, which acknowledges that the insured's health status has not changed since the policy was approved.

What is the best way to change an application? A. White-out the previous answer B. Draw a line through the incorrect answer and insert the correct one. C. Start over with a fresh application D. Erase the previous answer and replace it with the new answer

C. Start over with a fresh application Most companies require that the app be filled out in ink. The agent might make a mistake when filling out the app or the applicant might answer a question incorrectly and want to change it. There are two ways to correct an application. The first and best is to simply start over with a fresh application. If that is not practical, draw a line through the incorrect answer and insert the correct one. The applicant must initial the correct answer.

Whose responsibility is it to determine if all of the questions on an application have been answered? A. The applicant B. The beneficiary C. The agent D. The insurer

C. The agent It is the responsibility of the agent to make sure that the application has been properly signed and that all questions have been answered correctly.

Common Exclusions from Coverage

Common Exclusions 1. War or military service 2. Self-inflicted injuries 3. Elective Cosmetic surgery 5.Conditions that are covered by workers compensation 6. conditions that are covered by government plans (such as medicare, Medicaid) 7. participation in criminal activities

Which of the following is true about the requirements regarding HIV exams? A. Results may be disclosed to the agent and the underwriter. B. Prior informed oral consent is required from the applicant. C. HIV exams may not be used as a basis for underwriting. D. The applicant must give prior informed written consent.

D. The applicant must give prior informed written consent. A separate written consent form must be obtained prior to an HIV exam. HIV exam results may be disclosed to underwriters, but not agents.